THE SARBANAS-OXLEY ACT 2002

The Sarbanas-Oxley Act 2002

The Sarbanas-Oxley Act 2002

Purpose

The reason of this paper is to discover the impact of the Sarbanes-Oxley proceed of 2002 (SOX) on little corporations when compared to large companies and to enquire dissimilarities perceived by little and large companies with respect to charges and interior controls.

Design/methodology/approach

A questionnaire containing 20 inquiries (five demographic and fifteen speaking to issues related to SOX implementation) was mailed to 5,479 board members, CEOs, and CFOs of 676 distinct firms with 117 completed reviews returned.

Findings

The outcomes of the study display significant dissimilarities in the answers between small and large companies in relation to 1) the over-all influence of SOX on the firm; 2) the allowance of time dedicated to SOX; 3) the role of the external auditor; the firm's implementation stage; 4) the most important challenges due to SOX implementation; 5) the business governance restructures instituted; and 6) alterations in board compensation.

Literature Review

Regulatory Agencies and Congress are recognizing both the values and emerging issues for small firms as the Sarbanes-Oxley Act of 2002 is implemented (Bernardi, 2005, 34). On April 23, 2006 the Advisory managing group on lesser Public businesses handed out a last Report to the Security and Exchange Commission assessing the impact of Sarbanes-Oxley Act of 2002 on lesser public companies.

In 2007 the SEC issued non-binding guidelines to help small companies as they address Sarbanes-Oxley implementation. The most important anxiety to lesser companies appears to be the burdensome cost of applying part 404 on interior controls. The Financial Executives Institute (FEI) reports that the highest cost for each dollar of revenue is that borne by firms with revenue of $100 million or less 3.57% (Boury, 2005, 27).

In February 2008 the SEC taken up amendments to its disclosure and describing obligations when it issued lesser reporting ...